MW The Dow Jones Transportation Average is on a historic tear. Here are 6 charts you need to see.
By Joseph Adinolfi
Dow transports have outperformed Dow industrials by the widest margin going back to at least 1953, data show
The Dow Jones Transportation Average, often seen as providing a read on the health of the economy, is hitting fresh record highs.
The Dow Jones Transportation Average, seen as a proxy for the health of the U.S. economy, has been on a historic run lately following a protracted period of subpar returns. Can it keep on trucking?
Over the 100 days through Monday, the Dow transports DJT outperformed the Dow Jones Industrial Average DJIA by more than 38 percentage points - the strongest outperformance on record going back to at least 1953, which is as far back as Dow Jones Market Data goes.
Furthermore, since the start of 2026, the Dow transports have nearly tripled the return of the small-cap Russell 2000 RUT, the next best-performing major U.S. equity index, according to Sevens Report Research.
This blistering outperformance has landed the Dow transports squarely in overbought territory, according to criteria used by most technical analysts. That means investors should brace for a sharp pullback.
The Dow Jones Transportation Average's 14-day relative strength index has topped 80, the highest reading since November 2021, Dow Jones Market Data showed. The last time that happened, it coincided with the peak of the tansportation average's COVID-19-era rally. Readings above 70 are considered overbought.
Meme-stock madness
Adding to the risks of an abrupt reversal: Much of this year's advance has been driven by one stock, Avis Budget Group $(CAR)$. Shares of the car-rental company have exploded higher over the past month. They closed at a record high above $600 a share on Monday, compared with around $100 a share one month ago, FactSet data showed. Fundamental news for the company hasn't been great recently; Avis reported a sizable loss in 2025, and most have chalked up the rally to a vicious short squeeze. Of note, the bulk of the company's shares are controlled by two hedge funds.
Barron's: What Is Powering the Avis Short Squeeze? Inside the Math of a Supply-Demand Crisis.
This isn't the first time Avis has taken off like this. The stock saw a big run-up in 2021, when it emerged as one of the original members of the meme-stock contingent led by GameStop $(GME)$ and AMC Entertainment Holdings $(AMC)$.
Since then, Avis has retained much of its meme-stock DNA, according to Joseph Saluzzi of Themis Trading, who noted its high volume of short interest, a relatively small float and an explosion of trading volume.
"Sometimes, they like to bring back the greatest hits," Saluzzi told MarketWatch during an interview on Monday.
Since the start of the year, Avis has made a bigger contribution to the Dow Jones Transportation Average than the next 10 biggest contributors combined, as the table below shows.
Security Name YTD Point Contribution
Avis Budget Group 2374.28
FedEx 672.39
Old Dominion Freight Line 395.95
Matson 344.25
J.B. Hunt Transport Services 329.57
Ryder System 232.14
Kirby 207.26
Landstar System 189.47
C.H. Robinson Worldwide 139.52
Union Pacific 128.74
Norfolk Southern 88.73
United Parcel Service 47.09
CSX 45.92
Delta Air Lines 15.07
Southwest Airlines 8.9
Expeditors International of Washington -11.11
American Airlines Group -16.56
Uber Technologies -29.81
Alaska Air Group -31.83
United Airlines Holdings -65.08
Source: FactSet; Dow Jones Market Data
Jonathan Krinsky, a market technician at BTIG, urged investors to approach Avis with caution, since the parabolic move higher of its shares could swiftly and painfully reverse.
"We recognize there is a unique situation with two holders owning a significant amount of shares, thus leaving a minuscule free float. With that said, parabolas only end in one way: in equal and opposite fashion," Krinsky said.
Beyond Avis
The surge in shares of Avis has transformed it into the biggest constituent in the Dow Jones Transportation Average - although the index was hitting fresh records earlier this year, even before shares of the struggling car-rental company took off.
That isn't to say there haven't been any bumps along the way. Some members of the 20-stock transportation average involved in freight and logistics briefly fell victim to the "AI scare trade" that rattled some corners of the market back in February.
But over the past few months, investors' preference for value stocks and more cyclical names that fit the "HALO" archetype - an acronym that stands for "heavy assets, low obsolescence" risk - has more than offset any AI-related concerns.
As a result, the Dow transports index has recorded more record highs than the Dow industrials so far this year. The last full calendar year where the transports tallied more record highs than the industrials was 2014, Dow Jones Market Data showed.
Avis's ascent certainly complicates the outlook for the Dow transports, but it is hardly the only component trending higher. In fact, gains by other members of the transportation average had helped push it into record territory earlier in the year, even before Avis really took off.
"It's bigger than just Avis," said J.C. Parets, a market technician and founder of TrendLabs, during an interview with MarketWatch. "The railroads have been breaking out [and] FedEx, Kirby, Matson and Ryder System are all doing well."
There's also shares of Delta Air Lines, which recently touched record highs on hopes for dealmaking activity and strong earnings guidance. Despite a sharp jump in fuel costs caused by the Iran conflict, Delta executives said spending by wealthier customers should continue to boost the company's bottom line in 2026.
"In this K-shaped economy, the wealthier people are still flying," said Gene Goldman, chief investment officer at Cetera Financial Group, during an interview with MarketWatch.
After a downturn that had persisted for the past three years, executives from trucking firms like Old Dominion and J.B. Hunt told analysts earlier this year that demand appeared to be finally improving.
The transports rally has also helped reassure some investors that a bull market that reached its third birthday in October still has room to run, by finally offering a confirmatory signal in accordance with the so-called Dow Theory.
According to Dow Theory - which was first developed by Dow Jones & Co. co-founder Charles Dow more than a century ago - investors look for both the Dow transports and the Dow industrials to be trending higher. The logic is that if both firms that make things and firms that ship things are doing well in the stock market, then the U.S. economy must be in good shape.
That being said, the stock market is not the economy. And as Parets pointed out, the transportation average has undergone some dramatic changes over the past century. For example, Uber Technologies was added a few years back. And prior to 2026, the bull market in U.S. stocks had been doing just fine even without the Dow Theory's green light.
The Dow Jones Transportation Average was headed for another closing record high on Tuesday. It was up 1.3% at 23,619 in recent trade, as shares of Avis continued to power higher. Meanwhile, the Dow Jones Industrial Average was trading modestly higher at 49,516.
Tomi Kilgore, Michael DeStefano and Ken Jimenez contributed .
-Joseph Adinolfi
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(END) Dow Jones Newswires
April 21, 2026 12:45 ET (16:45 GMT)
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